Arm shares slide as investors lock in gains after AI-driven rally

Friday 03 April 2026 - 12:40

By: Dakir Madiha

Arm shares slide as investors lock in gains after AI-driven rally

Shares in Arm Holdings fell sharply on Thursday, dropping approximately 5.5 percent from the previous session's close, even as the chip designer was riding a wave of high-profile announcements that had fueled a strong run in recent weeks. The pullback, which brought the stock to around $146 during the April 2 trading session, came as investors appeared to secure profits following a gain of more than 45 percent since early January lows.

The selloff highlighted the tension between Arm's growing strategic ambitions in artificial intelligence and a valuation that continues to give some investors pause.

The decline followed a period of consistently positive news. On March 24, Arm unveiled its first internally designed data center processor, the Arm AGI CPU, marking a historic shift for a company that had spent 35 years licensing chip designs rather than producing its own silicon. Built on Arm's Neoverse V3 architecture and co-developed with Meta, the chip targets agentic AI workloads and delivers more than double the performance per rack compared with competing x86 platforms, according to Arm. Launch partners include OpenAI, Cerebras, Cloudflare, and SAP.

Days later, IBM announced a collaboration with Arm to develop dual-architecture hardware, aimed at integrating Arm-based software environments into IBM's enterprise mainframe and LinuxONE systems for AI and data-intensive workloads.

Despite the bullish catalysts, Arm's valuation remains a sticking point. The stock's price-to-earnings ratio stood above 200 at the end of March, according to data from GuruFocus and Public.com — well beyond semiconductor sector norms. BofA Securities downgraded Arm to "neutral" earlier this year, citing slowing license revenue growth and increasing reliance on SoftBank as a customer.

Adding to caution, recent SEC filings revealed that CEO Rene Haas sold 31,853 shares on March 25 and 26 at prices of approximately $160 to $163, totaling around $5.1 million. CFO Jason Child sold 21,280 shares on March 25 at $148.37 per share, for a value of approximately $3.2 million. Both transactions were executed under pre-established trading plans pursuant to Rule 10b5-1.

Wall Street sentiment remains broadly constructive. According to MarketBeat, 19 of the 27 analysts covering the stock carry a buy or strong buy recommendation, with a 12-month average price target of close to $168. TipRanks places the consensus slightly higher, at around $172. Those figures imply meaningful upside from current levels, though they also reflect a wide range of estimates spanning $100 to $210.